F. Scott Fitzgerald once said there are no second acts in American lives. However, after having spent 20 years in the IT industry, serving in various roles from system administration to network engineer (10 of which have been in education), I’ve recently decided that my second act should be as a freelance writer covering the investor's view of the technology industry. My background in engineering gave me what I consider strong analytical skills. My 15 years of trading and investing gives me the experience to assess equities and appraise their value. I am a Warren Buffett disciple that bases investment decisions on the quality of a company's management, its growth prospects, return on equity and price-to-earnings ratio. I employ conservative strategies to increase capital while also keeping a watchful eye on macro-economic events to mitigate downside risk.

Apple and Samsung Agree To No More Nastiness, What Does It Mean

They say there’s a thin line between love and hate. In the world of business however, the lines are clear and they are bold – you can’t miss them. This is especially true in the tech sector where companies fight every day trying to put each other out of business.

There has been no better example of this than with tech giants Apple and Samsung and their on-going legal dispute over copyrights. Samsung proclaims “flattery” while Apple screams “theft.” Who’s right? I suppose it depends on who the judge is.

Four months ago, Apple was awarded $1 billion worth in damages after a federal jury found sufficient evidence to determine that Samsung willfully infringed upon several Apple patents. Apple immediately sought to ban sales of several Samsung products in the U.S. Samsung argued that it deserved a new trial – citing (among other things) juror misconduct. Suddenly, the company has done an about-face. What changed?

In a move that comes completely unexpected, the South Korean giant has decided to drop its suit against Apple in Five European countries – Germany, France, the U.K., Italy and the Netherlands. Samsung’s surprised decision comes only one day after the company earned a small victory after Apple’s sale ban request of Samsung’s products was denied by a U.S. judge

Samsung officials released the following statement:

“Samsung remains committed to licensing our technologies on fair, reasonable and nondiscriminatory terms, and we strongly believe it is better when companies compete fairly in the marketplace, rather than in court,” the company said. “In this spirit, Samsung has decided to withdraw our injunction requests against Apple on the basis of our standard-essential patents pending in European courts, in the interest of protecting consumer choice.”

That sounds great, but companies don’t typically make such PR moves without expecting something in return. Does it mean that Apple and Samsung will settle the rest of their disputes out of court? Is Samsung no longer a threat to cut off Apple’s supply of parts? How will this impact Google’s relationship with Apple?

If it is true that there will be no more nastiness between the two companies, there is a chance that this peace treaty might still present come casualties. Unfortunately, it might adversely impact Microsoft and Research in Motion since both stood to benefit from any prolonged rift with the Android OS. Phone manufactures were looking for non-Android platforms as a way to avoid potential obstacles. RIM’s BB10 and Microsoft’s Windows Phone 8 were ideal alternatives. But perhaps not anymore.

If Apple agrees to drop its sales ban on 26 Samsung phones, that means there are more devices with which the weaker players such as RIM and Microsoft must compete. Also it remains to be seen how this will affect the $1 billion in damages that Apple was awarded during the summer. Will the two companies negotiate the amount lower or was this already a consideration in Samsung’s sudden “change of heart.” Investors will find out soon enough.

Early indicators suggest that the market loves this news. Shares of Apple are up over 1% to $525.19 in premarket activity.

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Uhm… I didn’t know you could use the stock upticks as an indication if the market approved of a result or not. Especially since the market appears to be giving you mixed messages then. As of the time of this writing:

RIM -2.64% APPL +1.59% MSFT 1.38% NOK 6.20%

By your logic, it would appear that the markets now believe Nokia is going to benefit from this new arrangement, much more than Apple will. I somehow doubt this is the case.

It is quite simple, you don’t. If it is as you said, you can use an uptick as a measurement, the statement about the agreement between Apple and Samsung being negative for Microsoft is not true, as its stock increased as well. Nokia, who is dependent on Microsoft right now had an even larger surge.

So by your very logic the market is saying “Nokia will benefit from the new agreement between Samsung and Nokia”, and they are saying it will be more beneficial, as its stock price increased more. Please refute :)

“So by your very logic the market is saying “Nokia will benefit from the new agreement between Samsung and Nokia”, and they are saying it will be more beneficial, as its stock price increased more. Please refute :)”

I see your point. It’s also quite possible that there might be off-setting reasons for why any stock reaction may not be immediately absorbed.

In your MSFT example, that the stock is up may have more to do with news that are more favorable and direct to MSFT and less to do with what “possible” impact that Apple’s and Samsung’s news may have – all of which are speculative.

But I think a stock’s reaction to news will always be an indicator of how the market feels about that news. Now whether or not there is an increased volume of “off-setting” news, that’s another story altogether. We can then go very deep into which bit of information had the biggest impact. But we’ll likely go at this forever :-)

I suggest a different tack. Give everyone their injunctions with no remedy. See how fast everyone innovates to work around them. Monetary relief is nothing, especially for the major players. But cut their revenue out from under them and you move them out of the uncertainty of a court case.

As for the SEP holders, they should be held to their FRAND commitments. Of course the issue comes when someone who can’t pay the whole fee wants to trade patents as part of the deal. I say tough. Pony up or forget it. But the SEP holders need to honour FRAND, same rate for everyone, no exceptions, or they lose all rights to their patents.

The problem with rules is people don’t always want them so things will be clearer. they want the rules so they can justify why they don’t apply to them.

Entirely unrealistic. But I honestly think the benefit would be the patent system accomplishing what it was set up to do, spur and reward innovation. Anytime the court gets involved in things like this the results are always drug out to an irrelevant end, months even years of cases and appeals.

I think it also levels out the playing field. If the little guy who created something can get real, timely relief the big guy will be forced to deal sooner. I know of at least one person who created something, but because of the deep pockets of the big guy he had no recourse to outlast the endless trial system.

I also think something similar needs to be dealt with non-practicing entities who buy patents. I have no problem with a guy who invents and patents, but does not have the capacity to turn over to implementation so sells or license his invention. But a company who only exists to buy and hold patents is no longer allowed. If you didn’t invent it or you buy it and don’t do anything with it, you don’t get to own it. Even practicing entities start to straddle this kind of behaviour and that is sad.

Ah, well. This all only an issue as long as we live in a monetary economy. When we can move to a post-monetary economy there may be hope. But people are still people. They’ll find something to exploit.